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Macy's Tech Attracts Shoppers

October 31, 2014 10:33 am
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Macy's, Inc. (NYSE: M) continues to innovate its way to a retail leadership position.

Lately it has invested in serving the needs of its technologically savvy consumer. According to Macy's, one of its tech investments yields a 600-percent return. That's probably because so many customers have become tech-savvy.

Adage reports that 87 percent of shoppers conduct research on their desired products before visiting a store. Seventy-nine percent of customers whip out their smartphone or other connected device while inside a store, and 35 percent of consumers research after a visit, just to make sure they received the best possible deal.

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Macy's Leadership

Macy's understood this trend and is one step ahead of its competitors by having its inventory displayed within a Google (NASDAQ: GOOG) (NASDAQ: GOOGL) search result.

Beginning in November, Macy's customers will receive real time information as to what is available at their nearest Macy's location. By partnering with Google's proximity platform, Macy's customers will know before entering a store that their favorite blue sweater in a medium size is in stock.

Macy's estimates for every one dollar it invests in these search drives, the company benefits from $6 in store purchases, representing a coveted 600-percent return.

“In terms of bricks and mortar retailers, Macy's has led the way,” Brian Sozzi of Belus Capital Advisors told Benzinga in an e-mail. “Macy's leads in localizing inventory (meaning, Steelers jerseys in Pittsburgh, not so much in New York City.) Macy's has also lead the way in connecting online to its physical stores through buy online, ship/pick up in store.”

Same Day Delivery Coming?

Sozzi believes that after perfecting its online localized initiatives, Macy's will introduce a same-day delivery system which will further “widen its lead” among its retailing peers.

In an interview with Yahoo! Finance in August, Sozzi said that Macy's is primed to announce a “major same-day delivery program” within the next 12 months. Sozzi added that during a recent tour at Macy's flagship store in New York, it seemed to him that Macy's is “getting all its technology systems and processes in places to support a wider rollout of same-day delivery services.”

Same day delivery is a natural “next step” move for Macy's as its brick and mortar stores already double as “mini distribution points.” According to Sozzi, adding same-day delivery capabilities will allow Macy to grow its e-commerce business by maximizing usage from its real estate properties that the company already pays for.

Despite Macy's leadership in incorporating mobile as a key part of its business, there are other success stories.

“Wal-Mart Stores has invested a ton in mobile, its new Savings Catcher app has been well received,” Sozzi told Benzinga. “Starbucks also falls into the same category as Macy's, being a leader in mobile to the point it shows up favorably in its sales and profits. I would also say Best Buy has done a good job integrating its site to its stores, all stores now have ship from store capabilities.”

Analyst Ratings

Belus Capital Advisors rates the following companies mentioned in this article as of October 6:

Best Buy Co Inc (NYSE: BBY) was Hold-rated with a $31 price target. At time of publication, the shares were trading around $34.

Starbucks Corporation (NASDAQ: SBUX) was Buy-rated with an $86 price target. The shares were trading around $75 at the time of publication.

Wal-Mart Stores, Inc. (NYSE: WMT) was Sell-rated with a $71 price target; it was trading around $77 at time of publication.

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